1. INTRODUCTION AND
OVERARCHING PRINCIPLES
Purpose of the Document
Crypto economy organisation (CEO) believes in the potential for blockchain applications to bring significant benefits to society, including introduction of new business models and more efficient, scalable, and affordable ways to enter into and verify contracts and transactions. Consequently, these actions can unlock greater economic creativity, as well as new ways of trading. CEO also believes that scaling digital finance can allow access to markets by people who currently have little or no such access, thereby increasing their level of success and financial inclusion, not dissimilar to the way the global internet enabled people of different walks of life to set up new businesses and engage in new trades that were previously not possible. At the same time, CEO recognises that capturing these opportunities requires the nascent crypto asset industry to adhere to the requisite level of self-discipline, self-assessment and maturity. Incidents of fraud, embezzlement, deception, and other forms of violation of existing laws, rules and regulations or bad behaviours threaten the reputation and sustainability of this nascent industry. Accordingly, through the principles contained in this Code of Conduct, CEO introduces guiding principles of good behaviour that should become a basis for future self-regulatory framework for CEO, its members as well as the broader community.
Given the diversity and rapidly evolving nature of the Cryptoasset industry, there can be no universal “one size fits all” set of standards; however, this Code is intended to serve as a guiding example of a common set of principles for responsible and sustainable participation in the market.
Definitions
Anti-Money Laundering (AML) - the collection of laws, processes, and regulations that prevent illegally obtained money from entering the financial system;
Cryptoasset - a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or traded electronically
CEO - Crypto economy organisation
Code - this Code of Conduct.
Cryptoasset Market - the global market for Cryptoassets, where Market Participants conduct commercial dealings in, in conjunction with or with reference to Cryptoassets.
Customer due diligence (CDD) - a series of checks to help verify customers' identities and assess their risk profiles
Counter-terrorist financing (CTF) - a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or traded electronically
Enhanced Due Diligence (EDD) - a KYC and AML process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by customer due diligence.
Know Your Customer (KYC) - standards of checks and procedures that are designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing;
Money Laundering (ML) - the generic term used to describe the movement, conversion, or any other use of the proceeds of criminal conduct.
Market Participant - a person or organization (regardless of legal form):
- financial institutions
- financial technology and other technology companies, IT service providers, technology consultants, blockchain engineers
- participants of DeFi ecosystems
- blockchain architects and other members of ecosystem
- DAO architects as well as other DAO service providers
- Creators and architects of decentralized protocols, such as borrowing and lending protocols
- Token issuers
- Operators of NFT trade and exchange platforms
- DAO structuring service providers
- VASP (virtual assets service providers)
- credit institutions
- payment institutions
- asset managers, sovereign wealth funds, hedge funds, pension funds, and insurance companies
- branches, affiliates, or joint ventures of the group it represents
- non-bank liquidity providers; firms running automated trading strategies, including high frequency trading strategies, and/or offering algorithmic execution
- brokers (including retail Cryptoasset brokers); investment advisers; aggregators; and analogous intermediaries / agents
- remittance businesses, money changers, and money services businesses in their interactions in the wholesale Cryptoasset Market
- Cryptoasset trading venues
- affirmation and settlement platforms; and
- any entity classified as an Cryptoasset Market Participant in the relevant jurisdiction(s)
The term also includes any personnel, teams or other units, which conduct the foregoing on behalf of a Market Participant.
Politically exposed person (PEP) - an individual that holds a prominent public position or function. Due to their role, they may be more susceptible to bribery, corruption, or other money laundering offences, as a result of this they are of high risk to financial institutions.
Terrorist Financing (TF) - the process by which terrorists fund their operations to perform terrorist acts. While different from money laundering, terrorists often exploit similar weaknesses in the financial system;
Certain notions and terms used in this Code may have specific definitions or meanings under applicable law, which may imply certain duties or obligations in a jurisdiction. Since this document is meant to serve as a code of good practice for Market Participants operating in different jurisdictions, it is not intended that the local meaning of terms in any one jurisdiction apply to the interpretation of this Code of Conduct. For the avoidance of doubt, terms used in this Code of Conduct should be read according to their commonly accepted meaning as terms of market practice in the Cryptoasset Market, and no specific legal or regulatory meaning should be imputed or ascribed to them.
The overarching principles contained in this Code are designed to work across a broad range of Cryptoasset related businesses and different actors, including token issuers, comparison and rating websites, trading platforms, asset custody and digital wallets, intermediaries, and funds. Additional principles may be added in due course for specific businesses and actors. This Code is intended to be a living document and as such principles may be amended and new principles may be added as new business models emerge.
Structure of the Code of Conduct
This Code sets out the standards of good practice for CEO and its members – Market Participants (used interchangeably), participating in CEO association and activities. Thus, this Code is primarily directed to and addressed to the Market Participants, although it may be used as a set of guidelines and best practices by broader community and interested stake-holders.
Each and every Market Participant before becoming a fully-fledged member of the CEO, shall carefully read the Code of Codunct and shall confirm its consent and agreement with the latter.
It is anticipated that this Code shall be employed by the competent bodies and regulators as an example of Cryptoasset Market industry self-regulation.
Who does this Code apply to?
The paramount objective of CEO is to unite all stakeholders of the Cryptoasset Market to create and support a friendly environment to develop the Cryptoasset economy in close collaboration with other existing economic ecosystems. We also seek to represent social, legal, and economic interests and responsibilities of the entire Cryptoasset Market stakeholders on interinstitutional, national and international levels.
Objectives of the CEO
- unite all stakeholders of Cryptoasset Market and other persons, supporting the development of Cryptoasset economy;
- represent social, legal, and economic interests and responsibilities of the entire Cryptoasset Market stakeholders on interinstitutional, national, and international levels.
- create and support friendly environment for Cryptoasset Market development in close collaboration with other existing economic ecosystems;
- promote Cryptoasset economy in society and encourage permanent professional development of the members of CEO.
While seeking its goals CEO:
- is actively involved in creating and developing a friendly business environment and social relationships of the trustworthy Cryptoasset Market participants.
- is collaborating with regulating institutions and policy makers in order to achieve effective and competitive Cryptoasset Market regulation.
- is promoting the introduction, integration, development and usage of blockchain and other distributed ledger technologies.
- is providing recommendations to Cryptoasset Market participants in relation to business, law, finance, education and other activities.
- is identifying, developing, and promoting cooperation and mutual trust between the participants of the Cryptoasset Market and governmental or international institutions.
- is promoting and developing cooperation on national and international levels.
- is shaping and developing ethical norms of the Market Participants and projects crowdfunding activities and is fostering compliance with this Code.
- is encouraging and contributing towards the creation of, and the integration of science technologies and innovations of peer-to-peer settlement, accounting, data processing, artificial intelligence, social media, and other areas.
- is promoting, organizing, contributing to organizing events or other activities to introduce Cryptoasset technologies and their capabilities to the society.
- releases publications and books.
- advices and renders other services to its members and other individuals.
- is conducting other lawful activities which are non-conflicting to this Code of Conduct and existing laws.
The goals of CEO are to:
- Ethics: Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the Cryptoasset Market.
- Governance: Market Participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their Cryptoasset Market activity and to promote responsible engagement in the Cryptoasset Market
- Execution: Market Participants are expected to exercise care when negotiating and executing transactions in order to promote a robust, fair, open, liquid, and appropriately transparent Cryptoasset Market.
- Transparency and Information Sharing: Market Participants are expected to be clear and accurate in their communications and to protect confidential information to promote effective communication that supports a robust, fair, open, liquid, and appropriately transparent Cryptoasset Market.
- Risk Management and Compliance: Market Participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the Cryptoasset Market.
- Confirmation and Settlement Processes: Market Participants are expected to put in place robust, efficient, transparent, and risk-mitigating processes to promote the predictable, smooth, and timely settlement of transactions in the Cryptoasset Market. This Code of Conduct establishes the basic principles of ethical conduct for members of the Crypto economy organisation, which are not directly regulated by the laws of the Republic of Lithuania, employment contracts, or internal regulations. This Code sets out the internal and external ethical relationships of the CEO and its members, as well as their protection system.
The managers of the CEO's members are responsible for compliance with the provisions of the Code of Conduct. The provisions of the Code of Conduct are binding on both the governing bodies of the Association and its members. Neither the governing bodies of the Association nor the leaders of the members have the right to disregard the rules of the Code of Conduct or encourage individuals under their authority to ignore or fail to comply with its requirements. The commitment to adhere to common values, principles of operational performance management, as well as this Code of Conduct, is an essential expression of ethical conduct.
This Code is based on SIX leading principles:
While the Code lays down global regulatory principles and practices, it is not a law, it has no binding legal power and does not carry or contend to carry any such value or power. Instead, the Code constitutes a set of voluntary principles.
CEO recognises that certain activities conducted in the token economy will inevitably enter the remit of existing applicable laws, rules, and regulations. The Code therefore seeks to complement and support such applicable laws, rules, and regulations and to act as gap-filling instrument in those cases and areas, where legal or regulatory clarity has not been achieved yet.
Limitation of the Code of Conduct
2. GUIDING
ACTIVITY
PRINCIPLES FOR MEMBERS
Compliance with Laws and Regulations
All CEO members, Market Participants, shall comply with the laws, regulations, and guidelines applicable to Cryptoasset and blockchain technology in the jurisdictions they operate. This includes adhering to AML and KYC requirements, as well as any other relevant financial and security regulations.
Ethical Trading Practices
Members engaging in Cryptoasset trading or investment, as well as other Cryptoasset related activities are expected to conduct themselves with the highest level of integrity and ethical standards. This includes refraining from engaging in market manipulation, insider trading, and any other fraudulent or deceptive practices.
Security and Privacy
Members handling Cryptoassets or involved in blockchain development must prioritize the security and privacy of user data and digital assets. This includes implementing robust security measures, staying up to date with industry best practices, and promptly addressing any security vulnerabilities or breaches.
Members should responsibly use blockchain and other innovative technology with relation to Cryptoassets, ensuring that their applications and platforms do not enable illegal activities, fraud, or harm to individuals or society.
Responsible Use of Technology
All communications, representations, and disclosures related to Cryptoassets must be accurate, transparent, and not misleading. Members shall not provide false or deceptive information to the public or investors, and any potential conflicts of interest must be disclosed.
Transparent and Accurate Information
Members engaging in Cryptoasset communities, online forums, or social media platforms must demonstrate respect, courtesy, and constructive engagement. Harassment, hate speech, or any form of offensive behaviour will not be tolerated.
Community Respect and Engagement
Any member, who becomes aware of a violation of this Code of Conduct or suspects unethical behaviour related to Cryptoasset within CEO should promptly report it to the designated Vytautas Kašėta at vytautas@cryptoeconomy.world . Whistleblower protection policies will be in place to safeguard those who report in good faith.
Reporting Violations
CEO will foster education and training to all the members to ensure a comprehensive understanding of this Code of Conduct, relevant regulations, and best practices in the Cryptoasset Market. CEO will foster sharing of knowledge and contemporary know-how among its members. CEO will also closely monitor surrounding conferences, workshops and related events, and will share relevant information amongst its members.
Education and Awareness
In case of any investigation or legal inquiry, members shall cooperate fully with relevant authorities and provide all necessary information to ensure compliance with the law.
Cooperation with Authorities
Failure to comply with the Guiding Principles laid down in this Chapter of the Code may result in disciplinary actions, including but not limited to, warnings, suspension, termination of membership, and potential legal consequences.
Specific sanctions and Code enforcement mechanisms as well as related rights and obligations of the members shall be laid down in the provisions of the bylaws of the CEO.
Each and every Market Participant before becoming a fully-fledged member of the CEO, shall carefully read the Code of Codunct and shall confirm its consent and agreement with the latter.
By abiding to the Guiding Principles laid down in this Chapter of the Code, CEO members contribute to the responsible and sustainable growth of Cryptoasset Market and promote a positive image of the blockchain and cryptocurrency industry within CEO and beyond.
3. PRINCIPLES OF ONBOARDING
Prospective members seeking admission to CEO shall submit a formal application for membership. The application process shall be initiated by completing and submitting the official membership application form provided by CEO. Application forms are available electronically through the CEO official website.
By submitting the membership application, the applicant confirms that:
(i) all information provided therein is true, accurate, and complete to the best of their knowledge; and
(ii) it has carefully read the Code of Codunct and confirms its consent and agreement with the latter.
Any false, misleading, or incomplete information may result in the rejection of the application or the subsequent termination of membership, at the discretion of the Membership Committee.
Along with the completed application form, prospective members may be required to submit relevant documentation or qualifications as specified by CEO. Such documents may include, but are not limited to, certificates, licenses, or any other evidence necessary to verify eligibility for membership.
The Regulations of the CEO shall provide specific and more detailed rules on the process of application review, eligibility confirmation and related procedures.
4. COMPLIANCE WITH EXISTING
LAWS
Crypto Economy Organisation is a legal person of limited civil liability, a non-governmental organisation founded in accordance with the Law on Associations of the Republic of Lithuania and other laws applicable in jurisdiction of the Republic of Lithuania.
Association operates in accordance with the Constitution of the Republic of Lithuania and other laws applicable in the jurisdiction of the Republic of Lithuania as well as in accordance with this Code and its internal regulations.
Association operates in accordance with the Constitution of the Republic of Lithuania and other laws applicable in the jurisdiction of the Republic of Lithuania as well as in accordance with this Code and its internal regulations.
Crypto economy organisation and its members assure that:
- We are aware that our activities are governed by existing rules and regulations, and we will take all reasonable measures to comply with applicable laws, rules or regulations.
- We understand that most jurisdictions have AML and CTF laws that require financial institutions and other designated parties to monitor transactions and report those whose nature, size, or frequency could indicate suspicious activity.
- We understand that many jurisdictions have standing securities laws, rules and regulations that, for example, often dictate that trading in or advising on securities, advising on corporate finance, and managing (collective) investment schemes requires a license or authorisations from a regulatory authority, as well as mandate other measures to protect investors and facilitate orderly and efficient markets.
- We understand that most jurisdictions have data privacy laws that stipulate, amongst others, that personal data must be kept safe and secure.
- We understand that most jurisdictions have contract laws and that issuing a commitment to the public and accepting consideration on the basis thereof may lead to a contract or partnership or possibly a trust relationship.
- We understand that most jurisdictions have consumer protection laws that protect consumers, among other things, against unfair, misleading, deceptive, or unconscionable acts or practices in trade or commerce.
- We understand that most jurisdictions have criminal laws that protect against fraud, embezzlement, and other dishonest and harmful behaviour.
- We understand that most jurisdictions have tax laws, and we will comply with such laws to the extent applicable to our businesses.
Legal and Organisational Requirements
Crypto economy organisation and its members affirm that:
- We will put in place a transparent legal governance and ownership structure that reasonably protects our interests and the interests of our customers.
- We will put in place and disclose a qualified management team that combines technology and financial expertise, including expertise on financial laws, rules, and regulations, and that will endeavour to comply in all material respects with the Code as well as with applicable laws, rules, and regulations.
- We will put in place KYC, CDD, transaction monitoring and other AML/CTF processes commensurate with the nature, complexity and size of our business in order to deter, detect and report financial crime as defined in laws applicable to us, which may include laws on money laundering, terrorist financing, bribery and corruption, sanctions breaches, tax evasion and modern slavery.
- We will put in place appropriate systems, processes, controls, risk assessments and independent reviews to run our businesses safely and responsibly.
- We will ensure that our technology systems and business processes are sufficiently robust and secure, proportionate to the nature, scale, and complexity of our businesses.
- We will put in place cybersecurity protections, denial of service protections, security patches, firewalls, resiliency and penetration testing and independent reviews proportionate to the cyber risks inherent to our businesses.
- We will put in place appropriate technology change management processes, crisis management processes and business continuity plans.
- Our terms and conditions will be clearly written and will explain what our duties and responsibilities are and what fees and charges will apply.
The content of this Code in no way supplants or modifies applicable law. Similarly, this Code does not represent the judgement, nor is it intended to bind the discretion of any regulator, supervisor, or other official sector entities with responsibility over the relevant markets or Market Participants, and it does not provide a legal defence to a violation of applicable law.
This Code of Conduct should serve as an essential reference for CEO members when conducting business in the Cryptoasset Market and when developing and reviewing internal procedures. It is not intended to be a comprehensive guide to doing business in the Cryptoasset Market.
5. ETHICS,
CONFLICTS MANAGEMENT AND MARKET INTEGRITY
Ethics
Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the Cryptoasset Market.
The ethical and professional behaviour of Market Participants underpins the fairness and integrity of the Cryptoasset Market. The exercise of judgement is central to acting ethically and professionally, and Market Participants (meaning both organisations and their personnel) should be guided in doing so by the high-level principles below, both when always applying the specific guidance in this Code and when participating in the Cryptoasset Market.
Highest Ethical Standards
Market Participants should strive for the highest ethical standards. Market Participants should:
act honestly, fairly and transparently in dealings with clients and other Market Participants, in a consistent and appropriately transparent manner.
act with integrity, particularly in avoiding and confronting questionable practices and behaviours.
Market Participants should strive for the highest professional standards. All Market Participants share a common interest in maintaining the highest degree of professionalism and the highest standards of business conduct in the Cryptoasset Market.
High standards of conduct are underpinned by:
- having sufficient knowledge of and complying with applicable law.
- having sufficient relevant experience, technical knowledge, and qualifications.
- acting with competence and skill.
- applying professional judgement in following the Market Participant’s guidelines and operating procedures, including, but not limited to, methods of execution, record keeping, and ethical behaviour.
- engaging in efforts to strive for the highest standards of professionalism in the wider Cryptoasset Market.
Market Participants should have personnel who are appropriately trained and who have the necessary experience to discharge their employment duties in a professional manner. Market Participants should perform appropriate staff background screening and due diligence to hire competent and professional people and advisors that act with honesty and integrity.
Highest Professional Standards
Market Participants should not knowingly misrepresent information about their regulatory and licensing status, financing services, including, but not limited to, lending practices, data privacy, research and marketing materials, and take all reasonable steps to ensure that client communications contain adequate content and disclosures.
Maintaining high standards of behaviour is the responsibility of:
- Market Participants, which should promote ethical values and behaviour within CEO, support efforts to promote high ethical standards in the wider Cryptoasset Market and encourage involvement by personnel in such efforts.
- senior and front-line management, which should be proactive in embedding and supporting the practice of ethical values within the Market Participant’s culture and be prepared to give appropriate advice to personnel.
- personnel, who should apply judgement when facing ethical questions, expect to be held responsible for unethical behaviour, and seek advice where appropriate.
- personnel should report and/or escalate issues of concern to appropriate parties internally or externally, having regard to the circumstances.
Market Participants should identify actual and potential conflicts of interest that may compromise or be perceived to compromise the ethical or professional judgement of Market Participants.
Market Participants should eliminate these conflicts or, if this is not reasonably possible, effectively manage them to promote fair treatment of their clients and other Market Participants, up to and including abstaining from undertaking the relevant activity or action due to the conflict of interests.
Personnel should be aware of the potential for conflicts of interest to arise and comply with their firm’s policies in these areas.
Contexts in which conflicts may arise include, but are not limited to:
- situations where personal or Market Participant’s interests may conflict with those of a client or other Market Participant, or where such a conflict arises for the Market Participant because the interests of one client may conflict with those of another.
- personal relationships.
- gifts and corporate entertainment.
Conflicts of Interest
CEO members should put in place appropriate and effective arrangements to eliminate or manage conflicts of interest. This could include:
- segregation of duties and/or reporting lines.
- establishing information barriers (for example, physical segregation of certain departments and/or electronic segregation).
- altering the duties of personnel when such duties are likely to give rise to conflicts of interest.
- providing training to relevant personnel to enable them to identify and handle conflicts of interest.
- establishing declaration policies and/or records for identified conflicts of interest and personal relationships, as well as for gifts and corporate entertainment received.
- having adequate policies and procedures in relation to personal trading, outside business activities and the receipt or provision of gifts or entertainment.
- implementing processes designed to identify, detect, and deter trading of Cryptoassets based on material non-public information, or practices that are designed to manipulate the price of Cryptoassets improperly or artificially.
Where it is concluded that a specific conflict of interest cannot reasonably be avoided or effectively managed (including by ceasing to undertake the relevant service or activity), Market Participants should disclose sufficient details of the conflict to enable the affected parties to decide beforehand whether they wish to proceed with the transaction or service.
Personal Dealing
CEO members assure that for the conflict management they will:
- apply appropriate staff background screening and due diligence to hire competent and professional people and advisors that act with honesty and integrity.
- have adequate systems and controls to detect, manage and disclose material conflicts of interest within their own business or resulting from their services, activities, crossholdings, or investments.
- have adequate policies and procedures in relation to personal trading, outside business activities and the receipt or provision of gifts or entertainment.
- not knowingly issue, accept any form of compensation to issue, or ask or compensate others to issue, unfair, misleading, false, or deceptive information, data, advertisements, commentary, research or ratings.
Conflict Management
CEO members shall:
- treat their customers fairly and take reasonable steps to ensure that the risks and opportunities of Cryptoassets are presented in a clear and balanced fashion.
- ensure that customers can access information regarding their money and assets, including where the money is kept and any relevant transactions.
- take reasonable steps to ensure that monies and assets held by them on behalf of customers are subjected to asset custody and safekeeping approaches that are suitable and provide the requisite level of security for Cryptoassets.
- put in place processes for the orderly winding down of our businesses if they cease to operate and ensure that customers retain access to and ownership of their monies, data, and assets.
- put in place processes to enable customers who are unhappy about any aspect of their business or service to complain, and treat those complaints fairly, and properly record keep such complaints and the resolution thereof.
Market Integrity
6. PRINCIPLES FOR KYC / AML
Governance
CEO bodies and CEO members are committed to ensuring:
- ‘tone-from-the-top’ on the importance of AML / CFT.
- effective implementation and oversight of the AML / CFT programme.
- that it has sufficient resources to support its AML / CFT programme.
- that all employees receive regular AML / CFT training.
- that potential AML / CFT issues receive the appropriate prioritisation within the firm.
CEO members will develop, implement, and maintain an effective written AML / CFT policy that is reasonably designed to prevent our business from being used for ML and/or TF. This policy is to be approved by the bodies within. CEO members aim to ensure that our policy will:
- apply to all jurisdictions in which CEO members operate.
- apply to all entities within CEO member’s group, including majority owned subsidiaries.
- is subject to regular testing and independent review, and is updated when necessary.
Training
CEO members shall ensure that all employees receive regular and appropriate AML training suitable to their roles. The training programme shall be risk-based to ensure that staff with the most exposure to ML / TF risks, as well as those with specific AML / CFT compliance duties, receive comprehensive training on understanding and detecting such ML / TF risks.
CEO members shall provide regular briefings to staff on new and emerging ML / TF risks, and the red flags that may assist in identifying them.
CEO members shall take steps to identify, assess and take effective action to mitigate ML / TF risks that apply to them:
- assess their ML / TF risks taking into account jurisdiction, client profile, products / services, and distribution channel risks.
- maintain a written assessment of ML/TF risks identified, together with mitigations and overall residual risk. This assessment shall be kept up-to-date.
- apply a risk-based approach within our business towards our AML / CFT obligations.
Risk-Based Approach
CEO members shall conduct CDD using a risk-based approach before establishing business relationships with our customers, and therefore shall:
- where CDD cannot be completed on a customer, not establish a business relationship and consider filing a suspicious activity/transaction report where there is a suspicion of ML/TF.
- take appropriate steps to ensure the reliability and authenticity of the documents, data and / or information obtained for the purpose of verifying a customer’s identity.
- take appropriate steps to identify the beneficial owners.
- take appropriate measures to identify customers subject to economic sanctions, or who may be PEPs, or those who pose a higher risk of ML / TF.
- apply a risk-based approach to PEPs and apply an EDD procedure as required by local legislation.
- where a customer is identified as high risk, conduct EDD.
- following a risk-based approach, take appropriate steps to identify the customers’ source of funds as having not derived from ML / TF, whether fiat or virtual assets.
- where the CEO member’s business model involves virtual asset transfers, and where required to do so by local legislation, obtain and hold required and accurate originator information and required beneficiary information and submit the information to beneficiary institution, if any.
- if the CEO member is a beneficiary institution to a virtual asset transfer, and where required to do so by local legislation, obtain, and hold required originator information and required and accurate beneficiary information.
- take appropriate measures to ensure that we do not onboard or transact with any party where to do so would be in breach of sanctions imposed by the United Nations or any jurisdiction with whom our firm has a nexus.
Due Diligence
CEO members shall process and maintain all AML / CFT records securely as required by AML and data privacy laws within the jurisdictions in which the operate. This may include, but is not limited to: risk assessment records, CDD information, transaction monitoring records, suspicious activity / transaction reports (internal and external), and training records. Records will also be kept for off- boarded clients including the date and reasons for off-boarding.
Record Keeping
CEO members shall:
- take appropriate measures, using a risk-based approach, to periodically review their customers and identify those subject to economic sanctions, who may be PEPs, or those who pose a higher risk of ML / TF.
- ensure that their periodic reviews will be both on a regular cycle as well as where a clearly defined event takes place that may result in a change of the information they hold about a customer.
- conduct transaction monitoring on all transactions, whether fiat or virtual asset, to detect unusual behaviour that may be indicative of money laundering or terrorist financing, or that may violate economic sanctions measures.
- periodically test the effectiveness and accuracy of our AML / CFT controls as well as their compliance technology.
Ongoing Monitoring
CEO members warrant that they:
- understand that new technologies may increase the efficiency and efficacy of AML / CFT risk management and governance, but that such technologies can also introduce new risks.
- before introducing new technology, will assess what impact it may have on the ML / TF risks their organisation faces, and take appropriate steps to ensure the continued effectiveness of our AML / CFT programme.
- where new technology has been introduced into their AML / CFT programme, will periodically review it for accuracy, effectiveness, and compliance with legal and regulatory requirements.
New Technologies
CEO members shall:
- understand that while the operational aspects of AML / CFT can be outsourced, the ultimate responsibility for compliance remains with them.
- conduct risk-based due diligence on any third-party vendor, and their data, software, or service to satisfy themselves that our AML / CFT risk management is not compromised.
- ensure adequate testing is periodically performed on any third-party data, software, or service to satisfy them ourselves that our AML / CFT risk management is not compromised.
Reliance on Outsourcing
7. INNOVATIONS
AND
TECHNOLOGIES
Market Participants should have in place processes to address potential adverse outcomes arising from the use of or reliance on technological systems (hardware and software).
Market Participants should have processes in place to assign clear ownership of every system on which they rely, and changes should be approved according to internal policies. Any system or critical piece of technology should be thoroughly reviewed for soundness, tested before release into production use, with an audit trail of all actions taken saved and available for review. This should apply to the development, testing, deployment, and subsequent updates of trading systems and algorithms.
Market Participants involved in electronic trading should put in place appropriate and proportionate controls to reduce the likelihood of and mitigate any consequences of generating or acting upon electronic quotations that may result in erroneous transactions or market disruption such as off-market quotes or trades, fat finger errors, unintended or controlled trading activity arising from technological failures, flaws in trading logic, and unexpected or extreme market conditions.
Market Participants should have processes in place to detect, prevent, respond, and recover from cybersecurity risks present in the Cryptoasset Market.
Market Participants should have processes in place to address protocol risks which can impact the usability and value of digital assets on associated blockchains.
Market Participants should prepare to address issues resulting from protocol risks by conducting a careful evaluation of the protocols and establishing policies and decision-making mechanisms to mitigate these risks. These policies may vary between native assets (such as bitcoin) versus tokenized assets (such as fiat-backed stablecoins).
Market Participants establish rules for protocol changes in the agreements e.g., establish rules for determining reference Cryptoasset in the event of a protocol hard fork.
Market Participants should have processes in place to address smart contract risks and technical vulnerabilities by conducting careful evaluations and audits. Market Participants should mitigate the risk posed by smart contracts by conducting comprehensive audits of underlying technologies and instituting associated controls. Just like any other software, smart contracts may have technical vulnerabilities and should be subject to careful evaluation and audit.
In some cases, there may exist parties with administrative privileges over these contracts to override the business logic in part or in whole.
Market Participants are encouraged to implement straight-through automatic transmission of trade data from their front office systems to their operations systems and relevant blockchain protocols. Such transfer of trade data should be facilitated by means of secure interfaces where the transmitted trade data cannot be changed or deleted during transmission. Confirmation that third-party technological audit(s) have been undertaken to verify that the technology and code works as intended and that it is secure. When trade data cannot be transmitted automatically from the front office to the operations system, adequate controls should be in place so that trade data are captured completely and accurately in the operations system.
CEO members are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their Cryptoasset Market activity and to promote responsible engagement in the Cryptoasset Market. Appropriate governance structures should be in place to promote and support the principles set out in this Code.
Different Market Participants’ governance structures may vary in complexity and scope. The precise structure adopted should be commensurate with the size and complexity of the Market Participant’s Cryptoasset Market activities, and the nature of the Market Participant’s engagement in the Cryptoasset Market, considering applicable law.
However, the CEO recommends that a body, or individual(s), that is ultimately responsible for the Market Participant’s Cryptoasset business strategy and financial soundness is put in place adequate and effective structures and mechanisms to provide for appropriate oversight, supervision, and controls regarding the Market Participant’s Cryptoasset Market activity.
In addition, applicable laws and regulations may contain legal requirements pertaining to governance structure, specific functions, roles and officers (such as MLRO, DPO and Infosec Officer) to be put in place.
8. GOVERNANCE
9. PRINCIPLES FOR KYC / AML
As part of self-regulation framework, each member of the CEO shall be subject to regular review, certification and accreditation. Regularity, scope, procedure and methods (via questionnaires, audits, tests, interviews, etc.) for such CEO member review, certification and accreditation shall be designed and approved separately by the Board of the CEO, after consultations and discussion with the members and Market Participants. The Board shall define separate requirements for certification and accreditation and shall clearly communicate to CEO members the relevant requirements, consequences and procedures.
It is anticipated that the certification of the member shall represent a written assurance by CEO or any third party elected by the latter of the conformity of a member and its product, process or service to specified requirements. Accreditation, on the other hand, shall be the self-regulation based recognition by CEO, as an authoritative body, of the competence of the CEO member to work to
specified standards. All accreditation standards shall include the principles of quality management systems, etc.
By way of reference, such CEO member review, certification and accreditation criteria may include, but are not limited to, compliance with relevant laws and regulations, compliance with requirements of ethics, possession of relevant expertise and experience in the Cryptoasset Market, maturity of cybersecurity and cyber resilience, maturity of corporate governance structure.
CEO member review, certification and accreditation will in any case evaluate their existing compliance practices, including but not limited to AML and KYC procedures, security measures, data protection compliance, ethical standards and other relevant topics and requirements.
Education
To ensure comprehensive and sustainable understanding of the Code of Conduct and industry best practices, applicant members may be required to undergo specialized training and education programs. These programs may cover relevant topics such as regulatory compliance, security protocols, responsible trading practices, and blockchain technology.
Applicant members are expected to provide relevant documentation to support their certification. This may include legal registrations, financial statements, references, and any other information deemed necessary for the evaluation process. Additionally, a due diligence review may be conducted to verify the accuracy and legitimacy of the information provided.
Documentation and Due Diligence
Based on the results of the certification, competent body of the CEO (such as Certification Committee) will issue relevant certification decision regarding the applicant member. Certified members will receive a formal certification and badge of compliance with the Code of Conduct, demonstrating their commitment to ethical and responsible practices within the Cryptoasset Market.
Certification Decision
It is foreseen that the certified members will be subject to ongoing compliance monitoring to ensure their continued adherence to the Code of Conduct and any changes in laws and regulations. Periodic audits and reviews may be conducted, and members are required to promptly address any issues identified during these assessments.
Ongoing Compliance Monitoring
10. SANCTIONS
FOR NON-COMPLIANCE
Warning and Remediation
In cases of minor violations or instances of inadvertent non-compliance with the Code of Conduct, CEO members may receive an official warning. The member will be notified of the violation and provided with guidance on how to remedy the situation and prevent future occurrences.
Continued or repeated non-compliance with the Code of Conduct may result in the suspension of certain privileges within the CEO's community. This may include temporary restrictions on participation in certain activities or access to specific resources and platforms.
Suspension of Privileges
For more serious violations or a pattern of non-compliance, CEO members may be placed on probation. During this period, the member's activities and adherence to the Code of Conduct will be closely monitored. Failure to demonstrate improved compliance within the probationary period may lead to further sanctions.
Probation
Termination of Membership
Severe or repeated violations of the Code of Conduct, or failure to comply with sanctions during probation, may result in the termination of membership within CEO. The termination may lead to the loss of access to community resources and participation in related events and activities.
Legal Consequences
In cases where non-compliance involves legal violations or fraudulent activities, CEO reserves the right to take appropriate legal actions against the responsible party. Legal consequences may include civil or criminal proceedings in accordance with applicable laws and regulations.
Public Disclosure
In certain circumstances, CEO may choose to publicly disclose instances of non-compliance or violations of the Code of Conduct, as part of its commitment to transparency and maintaining the integrity of the Cryptoasset Market. Such disclosures will be made in compliance with privacy and data protection laws.
Loss of Certification
Certified CEO members who consistently fail to comply with the Code of Conduct may have their certification revoked. Loss of certification may impact their reputation and standing within the Cryptoasset Market.
Reconsideration and Appeals
Members subject to sanctions have the right to seek reconsideration and appeal the decision through a formal process by submitting an appeal to the Board. The appeal should be submitted in writing, providing additional information or clarifications as deemed necessary. The decision of the Board regarding the appeal shall be final. Sanctions will be applied proportionately, considering severity, frequency of violations as well as other circumstances. The primary goal of sanctions is to maintain a safe, ethical, and compliant environment within CEO's community, safeguarding the interests of all stakeholders and promoting
responsible conduct.
Bylaws of CEO
The Bylaws of CEO, regulations of the CEO as well as other requisite founding documents shall contain provisions with detailed procedures applicable in case of violations or non-compliance with the Code of Conduct as well as related enforcement mechanisms.
11. FINAL
PROVISIONS
Amendments and Modifications
This Code may be amended or modified from time to time at the discretion of CEO, by virtue of the relevant decision of the Board of the CEO.
Any changes will be communicated to the members as well as to all the relevant parties, and their acceptance and adherence to the updated Code will be presumed unless otherwise indicated in writing.
By becoming a part of CEO, all individuals, including employees, contractors, volunteers, partners, and stakeholders acknowledge that they have received, read, and understood this Code. Failure to abide by its principles and policies may result in appropriate disciplinary action.
Acknowledgment of Receipt
CEO is committed to fostering an inclusive and diverse environment where everyone is treated with respect and fairness. This Code prohibits any form of discrimination, harassment, or bias towards any individual or group based on race, ethnicity, religion, gender, sexual orientation, age, disability, or any other characteristic protected by law.
Non-Discrimination and Inclusivity
Confidentiality and Privacy
All parties bound by this Code shall respect the confidentiality and privacy of sensitive information, including but not limited to proprietary business data, personal information, and internal communications. Any disclosure of such information must be done in accordance with the applicable laws and regulations.
Governing Law
This Code shall be governed by and construed in accordance with the laws of the Republic of Lithuania without regard to conflicts of laws principles. Any disputes arising from or in connection with this Code shall be subject to the exclusive jurisdiction of the competent courts in Lithuania.
Severability
If any provision or part of this Code is held to be invalid or unenforceable by a court of competent jurisdiction, the remainder of the Code shall not be affected thereby and shall be enforced to the fullest extent permitted by law.
Waiver
The failure of CEO to enforce any provision of this Code at any time shall not be construed as a waiver of such provision or the right to enforce the same at a later date.
Contact Information
For any questions or concerns regarding this Code or its implementation, individuals can contact the Managing Director Skaiste Budbergyte-Zabielaite at skaiste@cryptoeconomy.world.
Effective Date
This Code shall become effective on 2023 December 1st, superseding any previous versions.
By adhering to this Code, CEO members collectively uphold their commitment to maintaining a positive, ethical, and respectful environment within CEO and in all of their interactions with external stakeholders.
It is anticipated that this Code shall be employed by the competent bodies and regulators as a good example and leading standard of Cryptoasset Market industry self-regulation.
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© 2024 by Crypto Economy Organisation.
1. INTRODUCTION AND
OVERARCHING PRINCIPLES
Purpose of the Document
Crypto economy organisation (CEO) believes in the potential for blockchain applications to bring significant benefits to society, including introduction of new business models and more efficient, scalable, and affordable ways to enter into and verify contracts and transactions. Consequently, these actions can unlock greater economic creativity, as well as new ways of trading. CEO also believes that scaling digital finance can allow access to markets by people who currently have little or no such access, thereby increasing their level of success and financial inclusion, not dissimilar to the way the global internet enabled people of different walks of life to set up new businesses and engage in new trades that were previously not possible. At the same time, CEO recognises that capturing these opportunities requires the nascent crypto asset industry to adhere to the requisite level of self-discipline, self-assessment and maturity. Incidents of fraud, embezzlement, deception, and other forms of violation of existing laws, rules and regulations or bad behaviours threaten the reputation and sustainability of this nascent industry. Accordingly, through the principles contained in this Code of Conduct, CEO introduces guiding principles of good behaviour that should become a basis for future self-regulatory framework for CEO, its members as well as the broader community.
Given the diversity and rapidly evolving nature of the Cryptoasset industry, there can be no universal “one size fits all” set of standards; however, this Code is intended to serve as a guiding example of a common set of principles for responsible and sustainable participation in the market.
Definitions
Anti-Money Laundering (AML) - the collection of laws, processes, and regulations that prevent illegally obtained money from entering the financial system;
Cryptoasset - a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or traded electronically
CEO - Crypto economy organisation
Code - this Code of Conduct.
Cryptoasset Market - the global market for Cryptoassets, where Market Participants conduct commercial dealings in, in conjunction with or with reference to Cryptoassets.
Customer due diligence (CDD) - a series of checks to help verify customers' identities and assess their risk profiles
Counter-terrorist financing (CTF) - a set of government laws, regulations, and other practices that are intended to restrict access to funding and financial services for those whom the government designates as terrorists;
Enhanced Due Diligence (EDD) - a KYC and AML process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by customer due diligence.
Know Your Customer (KYC) - standards of checks and procedures that are designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing;
Money Laundering (ML) - the generic term used to describe the movement, conversion, or any other use of the proceeds of criminal conduct.
Market Participant - a person or organization (regardless of legal form):
- financial institutions
- financial technology and other technology companies, IT service providers, technology consultants, blockchain engineers
- participants of DeFi ecosystems
- blockchain architects and other members of ecosystem
- DAO architects as well as other DAO service providers
- Creators and architects of decentralized protocols, such as borrowing and lending protocols
- Token issuers
- Operators of NFT trade and exchange platforms
- DAO structuring service providers
- VASP (virtual assets service providers)
- credit institutions
- payment institutions
- asset managers, sovereign wealth funds, hedge funds, pension funds, and insurance companies
- branches, affiliates, or joint ventures of the group it represents
- non-bank liquidity providers; firms running automated trading strategies, including high frequency trading strategies, and/or offering algorithmic execution
- brokers (including retail Cryptoasset brokers); investment advisers; aggregators; and analogous intermediaries / agents
- remittance businesses, money changers, and money services businesses in their interactions in the wholesale Cryptoasset Market
- Cryptoasset trading venues
- affirmation and settlement platforms; and
- any entity classified as an Cryptoasset Market Participant in the relevant jurisdiction(s)
The term also includes any personnel, teams or other units, which conduct the foregoing on behalf of a Market Participant.
Politically exposed person (PEP) - an individual that holds a prominent public position or function. Due to their role, they may be more susceptible to bribery, corruption, or other money laundering offences, as a result of this they are of high risk to financial institutions.
Terrorist Financing (TF) - the process by which terrorists fund their operations to perform terrorist acts. While different from money laundering, terrorists often exploit similar weaknesses in the financial system;
Certain notions and terms used in this Code may have specific definitions or meanings under applicable law, which may imply certain duties or obligations in a jurisdiction. Since this document is meant to serve as a code of good practice for Market Participants operating in different jurisdictions, it is not intended that the local meaning of terms in any one jurisdiction apply to the interpretation of this Code of Conduct. For the avoidance of doubt, terms used in this Code of Conduct should be read according to their commonly accepted meaning as terms of market practice in the Cryptoasset Market, and no specific legal or regulatory meaning should be imputed or ascribed to them.
The overarching principles contained in this Code are designed to work across a broad range of Cryptoasset related businesses and different actors, including token issuers, comparison and rating websites, trading platforms, asset custody and digital wallets, intermediaries, and funds. Additional principles may be added in due course for specific businesses and actors. This Code is intended to be a living document and as such principles may be amended and new principles may be added as new business models emerge.
Structure of the Code of Conduct
This Code sets out the standards of good practice for CEO and its members – Market Participants (used interchangeably), participating in CEO association and activities. Thus, this Code is primarily directed to and addressed to the Market Participants, although it may be used as a set of guidelines and best practices by broader community and interested stake-holders.
Each and every Market Participant before becoming a fully-fledged member of the CEO, shall carefully read the Code of Codunct and shall confirm its consent and agreement with the latter.
It is anticipated that this Code shall be employed by the competent bodies and regulators as an example of Cryptoasset Market industry self-regulation.
Who does this Code apply to?
The paramount objective of CEO is to unite all stakeholders of the Cryptoasset Market to create and support a friendly environment to develop the Cryptoasset economy in close collaboration with other existing economic ecosystems. We also seek to represent social, legal, and economic interests and responsibilities of the entire Cryptoasset Market stakeholders on interinstitutional, national and international levels.
Objectives of the CEO
- unite all stakeholders of Cryptoasset Market and other persons, supporting the development of Cryptoasset economy;
- represent social, legal, and economic interests and responsibilities of the entire Cryptoasset Market stakeholders on interinstitutional, national, and international levels.
- create and support friendly environment for Cryptoasset Market development in close collaboration with other existing economic ecosystems;
- promote Cryptoasset economy in society and encourage permanent professional development of the members of CEO.
While seeking its goals CEO:
- is actively involved in creating and developing a friendly business environment and social relationships of the trustworthy Cryptoasset Market participants.
- is collaborating with regulating institutions and policy makers in order to achieve effective and competitive Cryptoasset Market regulation.
- is promoting the introduction, integration, development and usage of blockchain and other distributed ledger technologies.
- is providing recommendations to Cryptoasset Market participants in relation to business, law, finance, education and other activities.
- is identifying, developing, and promoting cooperation and mutual trust between the participants of the Cryptoasset Market and governmental or international institutions.
- is promoting and developing cooperation on national and international levels.
- is shaping and developing ethical norms of the Market Participants and projects crowdfunding activities and is fostering compliance with this Code.
- is encouraging and contributing towards the creation of, and the integration of science technologies and innovations of peer-to-peer settlement, accounting, data processing, artificial intelligence, social media, and other areas.
- is promoting, organizing, contributing to organizing events or other activities to introduce Cryptoasset technologies and their capabilities to the society.
- releases publications and books.
- advices and renders other services to its members and other individuals.
- is conducting other lawful activities which are non-conflicting to this Code of Conduct and existing laws.
The goals of CEO are to:
- Ethics: Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the Cryptoasset Market.
- Governance: Market Participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their Cryptoasset Market activity and to promote responsible engagement in the Cryptoasset Market.
- Execution: Market Participants are expected to exercise care when negotiating and executing transactions in order to promote a robust, fair, open, liquid, and appropriately transparent Cryptoasset Market.
- Transparency and Information Sharing: Market Participants are expected to be clear and accurate in their communications and to protect confidential information to promote effective communication that supports a robust, fair, open, liquid, and appropriately transparent Cryptoasset Market.
- Risk Management and Compliance: Market Participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the Cryptoasset Market.
- Confirmation and Settlement Processes: Market Participants are expected to put in place robust, efficient, transparent, and risk-mitigating processes to promote the predictable, smooth, and timely settlement of transactions in the Cryptoasset Market.
This Code of Conduct establishes the basic principles of ethical conduct for members of the Crypto economy organisation, which are not directly regulated by the laws of the Republic of Lithuania, employment contracts, or internal regulations. This Code sets out the internal and external ethical relationships of the CEO and its members, as well as their protection system.
The managers of the CEO's members are responsible for compliance with the provisions of the Code of Conduct. The provisions of the Code of Conduct are binding on both the governing bodies of the Association and its members. Neither the governing bodies of the Association nor the leaders of the members have the right to disregard the rules of the Code of Conduct or encourage individuals under their authority to ignore or fail to comply with its requirements. The commitment to adhere to common values, principles of operational performance management, as well as this Code of Conduct, is an essential expression of ethical conduct.
This Code is based on SIX leading principles:
While the Code lays down global regulatory principles and practices, it is not a law, it has no binding legal power and does not carry or contend to carry any such value or power. Instead, the Code constitutes a set of voluntary principles.
CEO recognises that certain activities conducted in the token economy will inevitably enter the remit of existing applicable laws, rules, and regulations. The Code therefore seeks to complement and support such applicable laws, rules, and regulations and to act as gap-filling instrument in those cases and areas, where legal or regulatory clarity has not been achieved yet.
Limitation of the Code of Conduct
Compliance with Laws and Regulations
All CEO members, Market Participants, shall comply with the laws, regulations, and guidelines applicable to Cryptoasset and blockchain technology in the jurisdictions they operate. This includes adhering to AML and KYC requirements, as well as any other relevant financial and security regulations.
Ethical Trading Practices
Members engaging in Cryptoasset trading or investment, as well as other Cryptoasset related activities are expected to conduct themselves with the highest level of integrity and ethical standards. This includes refraining from engaging in market manipulation, insider trading, and any other fraudulent or deceptive practices.
Security and Privacy
Members handling Cryptoassets or involved in blockchain development must prioritize the security and privacy of user data and digital assets. This includes implementing robust security measures, staying up to date with industry best practices, and promptly addressing any security vulnerabilities or breaches.
Members should responsibly use blockchain and other innovative technology with relation to Cryptoassets, ensuring that their applications and platforms do not enable illegal activities, fraud, or harm to individuals or society.
Responsible Use of Technology
All communications, representations, and disclosures related to Cryptoassets must be accurate, transparent, and not misleading. Members shall not provide false or deceptive information to the public or investors, and any potential conflicts of interest must be disclosed.
Transparent and Accurate Information
Members engaging in Cryptoasset communities, online forums, or social media platforms must demonstrate respect, courtesy, and constructive engagement. Harassment, hate speech, or any form of offensive behaviour will not be tolerated.
Community Respect and Engagement
Any member, who becomes aware of a violation of this Code of Conduct or suspects unethical behaviour related to Cryptoasset within CEO should promptly report it to the designated Vytautas Kašėta at vytautas@cryptoeconomy.world . Whistleblower protection policies will be in place to safeguard those who report in good faith.
Reporting Violations
CEO will foster education and training to all the members to ensure a comprehensive understanding of this Code of Conduct, relevant regulations, and best practices in the Cryptoasset Market. CEO will foster sharing of knowledge and contemporary know-how among its members. CEO will also closely monitor surrounding conferences, workshops and related events, and will share relevant information amongst its members.
Education and Awareness
In case of any investigation or legal inquiry, members shall cooperate fully with relevant authorities and provide all necessary information to ensure compliance with the law.
Cooperation with Authorities
Failure to comply with the Guiding Principles laid down in this Chapter of the Code may result in disciplinary actions, including but not limited to, warnings, suspension, termination of membership, and potential legal consequences.
Specific sanctions and Code enforcement mechanisms as well as related rights and obligations of the members shall be laid down in the provisions of the bylaws of the CEO.
Each and every Market Participant before becoming a fully-fledged member of the CEO, shall carefully read the Code of Codunct and shall confirm its consent and agreement with the latter.
By abiding to the Guiding Principles laid down in this Chapter of the Code, CEO members contribute to the responsible and sustainable growth of Cryptoasset Market and promote a positive image of the blockchain and cryptocurrency industry within CEO and beyond.
2. GUIDING ACTIVITY PRINCIPLES FOR MEMBERS
Prospective members seeking admission to CEO shall submit a formal application for membership. The application process shall be initiated by completing and submitting the official membership application form provided by CEO. Application forms are available electronically through the CEO official website.
By submitting the membership application, the applicant confirms that:
(i) all information provided therein is true, accurate, and complete to the best of their knowledge; and
(ii) it has carefully read the Code of Codunct and confirms its consent and agreement with the latter.
Any false, misleading, or incomplete information may result in the rejection of the application or the subsequent termination of membership, at the discretion of the Membership Committee.
Along with the completed application form, prospective members may be required to submit relevant documentation or qualifications as specified by CEO. Such documents may include, but are not limited to, certificates, licenses, or any other evidence necessary to verify eligibility for membership.
The Regulations of the CEO shall provide specific and more detailed rules on the process of application review, eligibility confirmation and related procedures.
3. PRINCIPLES OF ONBOARDING
4. COMPLIANCE WITH EXISTING
LAWS
Crypto Economy Organisation is a legal person of limited civil liability, a non-governmental organisation founded in accordance with the Law on Associations of the Republic of Lithuania and other laws applicable in jurisdiction of the Republic of Lithuania.
Association operates in accordance with the Constitution of the Republic of Lithuania and other laws applicable in the jurisdiction of the Republic of Lithuania as well as in accordance with this Code and its internal regulations.
Association operates in accordance with the Constitution of the Republic of Lithuania and other laws applicable in the jurisdiction of the Republic of Lithuania as well as in accordance with this Code and its internal regulations.
Crypto economy organisation and its members assure that:
- We are aware that our activities are governed by existing rules and regulations, and we will take all reasonable measures to comply with applicable laws, rules or regulations.
- We understand that most jurisdictions have AML and CTF laws that require financial institutions and other designated parties to monitor transactions and report those whose nature, size, or frequency could indicate suspicious activity.
- We understand that many jurisdictions have standing securities laws, rules and regulations that, for example, often dictate that trading in or advising on securities, advising on corporate finance, and managing (collective) investment schemes requires a license or authorisations from a regulatory authority, as well as mandate other measures to protect investors and facilitate orderly and efficient markets.
- We understand that most jurisdictions have data privacy laws that stipulate, amongst others, that personal data must be kept safe and secure.
- We understand that most jurisdictions have contract laws and that issuing a commitment to the public and accepting consideration on the basis thereof may lead to a contract or partnership or possibly a trust relationship.
- We understand that most jurisdictions have consumer protection laws that protect consumers, among other things, against unfair, misleading, deceptive, or unconscionable acts or practices in trade or commerce.
- We understand that most jurisdictions have criminal laws that protect against fraud, embezzlement, and other dishonest and harmful behaviour.
- We understand that most jurisdictions have tax laws, and we will comply with such laws to the extent applicable to our businesses.
Legal and Organisational Requirements
Crypto economy organisation and its members affirm that:
- We will put in place a transparent legal governance and ownership structure that reasonably protects our interests and the interests of our customers.
- We will put in place and disclose a qualified management team that combines technology and financial expertise, including expertise on financial laws, rules, and regulations, and that will endeavour to comply in all material respects with the Code as well as with applicable laws, rules, and regulations.
- We will put in place KYC, CDD, transaction monitoring and other AML/CTF processes commensurate with the nature, complexity and size of our business in order to deter, detect and report financial crime as defined in laws applicable to us, which may include laws on money laundering, terrorist financing, bribery and corruption, sanctions breaches, tax evasion and modern slavery.
- We will put in place appropriate systems, processes, controls, risk assessments and independent reviews to run our businesses safely and responsibly.
- We will ensure that our technology systems and business processes are sufficiently robust and secure, proportionate to the nature, scale, and complexity of our businesses.
- We will put in place cybersecurity protections, denial of service protections, security patches, firewalls, resiliency and penetration testing and independent reviews proportionate to the cyber risks inherent to our businesses.
- We will put in place appropriate technology change management processes, crisis management processes and business continuity plans.
- Our terms and conditions will be clearly written and will explain what our duties and responsibilities are and what fees and charges will apply.
The content of this Code in no way supplants or modifies applicable law. Similarly, this Code does not represent the judgement, nor is it intended to bind the discretion of any regulator, supervisor, or other official sector entities with responsibility over the relevant markets or Market Participants, and it does not provide a legal defence to a violation of applicable law.
This Code of Conduct should serve as an essential reference for CEO members when conducting business in the Cryptoasset Market and when developing and reviewing internal procedures. It is not intended to be a comprehensive guide to doing business in the Cryptoasset Market.
5. ETHICS, CONFLICTS MANAGEMENT AND MARKET INTEGRITY
Ethics
Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the Cryptoasset Market.
The ethical and professional behaviour of Market Participants underpins the fairness and integrity of the Cryptoasset Market. The exercise of judgement is central to acting ethically and professionally, and Market Participants (meaning both organisations and their personnel) should be guided in doing so by the high-level principles below, both when always applying the specific guidance in this Code and when participating in the Cryptoasset Market.
Highest Ethical Standards
Market Participants should strive for the highest ethical standards. Market Participants should:
act honestly, fairly and transparently in dealings with clients and other Market Participants, in a consistent and appropriately transparent manner.
act with integrity, particularly in avoiding and confronting questionable practices and behaviours.
Market Participants should strive for the highest professional standards. All Market Participants share a common interest in maintaining the highest degree of professionalism and the highest standards of business conduct in the Cryptoasset Market.
High standards of conduct are underpinned by:
- having sufficient knowledge of and complying with applicable law.
- having sufficient relevant experience, technical knowledge, and qualifications.
- acting with competence and skill.
- applying professional judgement in following the Market Participant’s guidelines and operating procedures, including, but not limited to, methods of execution, record keeping, and ethical behaviour.
- engaging in efforts to strive for the highest standards of professionalism in the wider Cryptoasset Market.
Market Participants should have personnel who are appropriately trained and who have the necessary experience to discharge their employment duties in a professional manner. Market Participants should perform appropriate staff background screening and due diligence to hire competent and professional people and advisors that act with honesty and integrity.
Highest Professional Standards
Market Participants should not knowingly misrepresent information about their regulatory and licensing status, financing services, including, but not limited to, lending practices, data privacy, research and marketing materials, and take all reasonable steps to ensure that client communications contain adequate content and disclosures.
Maintaining high standards of behaviour is the responsibility of:
- Market Participants, which should promote ethical values and behaviour within CEO, support efforts to promote high ethical standards in the wider Cryptoasset Market and encourage involvement by personnel in such efforts.
- senior and front-line management, which should be proactive in embedding and supporting the practice of ethical values within the Market Participant’s culture and be prepared to give appropriate advice to personnel.
- personnel, who should apply judgement when facing ethical questions, expect to be held responsible for unethical behaviour, and seek advice where appropriate.
- personnel should report and/or escalate issues of concern to appropriate parties internally or externally, having regard to the circumstances.
Market Participants should identify actual and potential conflicts of interest that may compromise or be perceived to compromise the ethical or professional judgement of Market Participants.
Market Participants should eliminate these conflicts or, if this is not reasonably possible, effectively manage them to promote fair treatment of their clients and other Market Participants, up to and including abstaining from undertaking the relevant activity or action due to the conflict of interests.
Personnel should be aware of the potential for conflicts of interest to arise and comply with their firm’s policies in these areas.
Contexts in which conflicts may arise include, but are not limited to:
- situations where personal or Market Participant’s interests may conflict with those of a client or other Market Participant, or where such a conflict arises for the Market Participant because the interests of one client may conflict with those of another.
- personal relationships.
- gifts and corporate entertainment.
Conflicts of Interest
CEO members should put in place appropriate and effective arrangements to eliminate or manage conflicts of interest. This could include:
- segregation of duties and/or reporting lines.
- establishing information barriers (for example, physical segregation of certain departments and/or electronic segregation).
- altering the duties of personnel when such duties are likely to give rise to conflicts of interest.
- providing training to relevant personnel to enable them to identify and handle conflicts of interest.
- establishing declaration policies and/or records for identified conflicts of interest and personal relationships, as well as for gifts and corporate entertainment received.
- having adequate policies and procedures in relation to personal trading, outside business activities and the receipt or provision of gifts or entertainment.
- implementing processes designed to identify, detect, and deter trading of Cryptoassets based on material non-public information, or practices that are designed to manipulate the price of Cryptoassets improperly or artificially.
Where it is concluded that a specific conflict of interest cannot reasonably be avoided or effectively managed (including by ceasing to undertake the relevant service or activity), Market Participants should disclose sufficient details of the conflict to enable the affected parties to decide beforehand whether they wish to proceed with the transaction or service.
Personal Dealing
CEO members assure that for the conflict management they will:
- apply appropriate staff background screening and due diligence to hire competent and professional people and advisors that act with honesty and integrity.
- have adequate systems and controls to detect, manage and disclose material conflicts of interest within their own business or resulting from their services, activities, crossholdings, or investments.
- have adequate policies and procedures in relation to personal trading, outside business activities and the receipt or provision of gifts or entertainment.
- not knowingly issue, accept any form of compensation to issue, or ask or compensate others to issue, unfair, misleading, false, or deceptive information, data, advertisements, commentary, research or ratings.
Conflict Management
CEO members shall:
- treat their customers fairly and take reasonable steps to ensure that the risks and opportunities of Cryptoassets are presented in a clear and balanced fashion.
- ensure that customers can access information regarding their money and assets, including where the money is kept and any relevant transactions.
- take reasonable steps to ensure that monies and assets held by them on behalf of customers are subjected to asset custody and safekeeping approaches that are suitable and provide the requisite level of security for Cryptoassets.
- put in place processes for the orderly winding down of our businesses if they cease to operate and ensure that customers retain access to and ownership of their monies, data, and assets.
- put in place processes to enable customers who are unhappy about any aspect of their business or service to complain, and treat those complaints fairly, and properly record keep such complaints and the resolution thereof.
Market Integrity
6. PRINCIPLES FOR KYC / AML
Governance
CEO bodies and CEO members are committed to ensuring:
- ‘tone-from-the-top’ on the importance of AML / CFT.
- effective implementation and oversight of the AML / CFT programme.
- that it has sufficient resources to support its AML / CFT programme.
- that all employees receive regular AML / CFT training.
- that potential AML / CFT issues receive the appropriate prioritisation within the firm.
CEO members will develop, implement, and maintain an effective written AML / CFT policy that is reasonably designed to prevent our business from being used for ML and/or TF. This policy is to be approved by the bodies within. CEO members aim to ensure that our policy will:
- apply to all jurisdictions in which CEO members operate.
- apply to all entities within CEO member’s group, including majority owned subsidiaries.
- is subject to regular testing and independent review, and is updated when necessary.
Training
CEO members shall ensure that all employees receive regular and appropriate AML training suitable to their roles. The training programme shall be risk-based to ensure that staff with the most exposure to ML / TF risks, as well as those with specific AML / CFT compliance duties, receive comprehensive training on understanding and detecting such ML / TF risks.
CEO members shall provide regular briefings to staff on new and emerging ML / TF risks, and the red flags that may assist in identifying them.
CEO members shall take steps to identify, assess and take effective action to mitigate ML / TF risks that apply to them:
- assess their ML / TF risks taking into account jurisdiction, client profile, products / services, and distribution channel risks.
- maintain a written assessment of ML/TF risks identified, together with mitigations and overall residual risk. This assessment shall be kept up-to-date.
- apply a risk-based approach within our business towards our AML / CFT obligations.
Risk-Based Approach
CEO members shall conduct CDD using a risk-based approach before establishing business relationships with our customers, and therefore shall:
- where CDD cannot be completed on a customer, not establish a business relationship and consider filing a suspicious activity/transaction report where there is a suspicion of ML/TF.
- take appropriate steps to ensure the reliability and authenticity of the documents, data and / or information obtained for the purpose of verifying a customer’s identity.
- take appropriate steps to identify the beneficial owners.
- take appropriate measures to identify customers subject to economic sanctions, or who may be PEPs, or those who pose a higher risk of ML / TF.
- apply a risk-based approach to PEPs and apply an EDD procedure as required by local legislation.
- where a customer is identified as high risk, conduct EDD.
- following a risk-based approach, take appropriate steps to identify the customers’ source of funds as having not derived from ML / TF, whether fiat or virtual assets.
- where the CEO member’s business model involves virtual asset transfers, and where required to do so by local legislation, obtain and hold required and accurate originator information and required beneficiary information and submit the information to beneficiary institution, if any.
- if the CEO member is a beneficiary institution to a virtual asset transfer, and where required to do so by local legislation, obtain, and hold required originator information and required and accurate beneficiary information.
- take appropriate measures to ensure that we do not onboard or transact with any party where to do so would be in breach of sanctions imposed by the United Nations or any jurisdiction with whom our firm has a nexus.
Due Diligence
CEO members shall process and maintain all AML / CFT records securely as required by AML and data privacy laws within the jurisdictions in which the operate. This may include, but is not limited to: risk assessment records, CDD information, transaction monitoring records, suspicious activity / transaction reports (internal and external), and training records. Records will also be kept for off- boarded clients including the date and reasons for off-boarding.
Record Keeping
CEO members shall:
- take appropriate measures, using a risk-based approach, to periodically review their customers and identify those subject to economic sanctions, who may be PEPs, or those who pose a higher risk of ML / TF.
- ensure that their periodic reviews will be both on a regular cycle as well as where a clearly defined event takes place that may result in a change of the information they hold about a customer.
- conduct transaction monitoring on all transactions, whether fiat or virtual asset, to detect unusual behaviour that may be indicative of money laundering or terrorist financing, or that may violate economic sanctions measures.
- periodically test the effectiveness and accuracy of our AML / CFT controls as well as their compliance technology.
Ongoing Monitoring
CEO members warrant that they:
- understand that new technologies may increase the efficiency and efficacy of AML / CFT risk management and governance, but that such technologies can also introduce new risks.
- before introducing new technology, will assess what impact it may have on the ML / TF risks their organisation faces, and take appropriate steps to ensure the continued effectiveness of our AML / CFT programme.
- where new technology has been introduced into their AML / CFT programme, will periodically review it for accuracy, effectiveness, and compliance with legal and regulatory requirements.
New Technologies
CEO members shall:
- understand that while the operational aspects of AML / CFT can be outsourced, the ultimate responsibility for compliance remains with them.
- conduct risk-based due diligence on any third-party vendor, and their data, software, or service to satisfy themselves that our AML / CFT risk management is not compromised.
- ensure adequate testing is periodically performed on any third-party data, software, or service to satisfy them ourselves that our AML / CFT risk management is not compromised.
Reliance on Outsourcing
Market Participants should have in place processes to address potential adverse outcomes arising from the use of or reliance on technological systems (hardware and software).
Market Participants should have processes in place to assign clear ownership of every system on which they rely, and changes should be approved according to internal policies. Any system or critical piece of technology should be thoroughly reviewed for soundness, tested before release into production use, with an audit trail of all actions taken saved and available for review. This should apply to the development, testing, deployment, and subsequent updates of trading systems and algorithms.
Market Participants involved in electronic trading should put in place appropriate and proportionate controls to reduce the likelihood of and mitigate any consequences of generating or acting upon electronic quotations that may result in erroneous transactions or market disruption such as off-market quotes or trades, fat finger errors, unintended or controlled trading activity arising from technological failures, flaws in trading logic, and unexpected or extreme market conditions.
Market Participants should have processes in place to detect, prevent, respond, and recover from cybersecurity risks present in the Cryptoasset Market.
Market Participants should have processes in place to address protocol risks which can impact the usability and value of digital assets on associated blockchains.
Market Participants should prepare to address issues resulting from protocol risks by conducting a careful evaluation of the protocols and establishing policies and decision-making mechanisms to mitigate these risks. These policies may vary between native assets (such as bitcoin) versus tokenized assets (such as fiat-backed stablecoins).
Market Participants establish rules for protocol changes in the agreements e.g., establish rules for determining reference Cryptoasset in the event of a protocol hard fork.
Market Participants should have processes in place to address smart contract risks and technical vulnerabilities by conducting careful evaluations and audits. Market Participants should mitigate the risk posed by smart contracts by conducting comprehensive audits of underlying technologies and instituting associated controls. Just like any other software, smart contracts may have technical vulnerabilities and should be subject to careful evaluation and audit.
In some cases, there may exist parties with administrative privileges over these contracts to override the business logic in part or in whole.
Market Participants are encouraged to implement straight-through automatic transmission of trade data from their front office systems to their operations systems and relevant blockchain protocols. Such transfer of trade data should be facilitated by means of secure interfaces where the transmitted trade data cannot be changed or deleted during transmission. Confirmation that third-party technological audit(s) have been undertaken to verify that the technology and code works as intended and that it is secure. When trade data cannot be transmitted automatically from the front office to the operations system, adequate controls should be in place so that trade data are captured completely and accurately in the operations system.
7. INNOVATIONS AND TECHNOLOGIES
8. GOVERNANCE
CEO members are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their Cryptoasset Market activity and to promote responsible engagement in the Cryptoasset Market. Appropriate governance structures should be in place to promote and support the principles set out in this Code.
Different Market Participants’ governance structures may vary in complexity and scope. The precise structure adopted should be commensurate with the size and complexity of the Market Participant’s Cryptoasset Market activities, and the nature of the Market Participant’s engagement in the Cryptoasset Market, considering applicable law.
However, the CEO recommends that a body, or individual(s), that is ultimately responsible for the Market Participant’s Cryptoasset business strategy and financial soundness is put in place adequate and effective structures and mechanisms to provide for appropriate oversight, supervision, and controls regarding the Market Participant’s Cryptoasset Market activity.
In addition, applicable laws and regulations may contain legal requirements pertaining to governance structure, specific functions, roles and officers (such as MLRO, DPO and Infosec Officer) to be put in place.
9. PRINCIPLES FOR KYC / AML
As part of self-regulation framework, each member of the CEO shall be subject to regular review, certification and accreditation. Regularity, scope, procedure and methods (via questionnaires, audits, tests, interviews, etc.) for such CEO member review, certification and accreditation shall be designed and approved separately by the Board of the CEO, after consultations and discussion with the members and Market Participants. The Board shall define separate requirements for certification and accreditation and shall clearly communicate to CEO members the relevant requirements, consequences and procedures.
It is anticipated that the certification of the member shall represent a written assurance by CEO or any third party elected by the latter of the conformity of a member and its product, process or service to specified requirements. Accreditation, on the other hand, shall be the self-regulation based recognition by CEO, as an authoritative body, of the competence of the CEO member to work to
specified standards. All accreditation standards shall include the principles of quality management systems, etc.
By way of reference, such CEO member review, certification and accreditation criteria may include, but are not limited to, compliance with relevant laws and regulations, compliance with requirements of ethics, possession of relevant expertise and experience in the Cryptoasset Market, maturity of cybersecurity and cyber resilience, maturity of corporate governance structure.
CEO member review, certification and accreditation will in any case evaluate their existing compliance practices, including but not limited to AML and KYC procedures, security measures, data protection compliance, ethical standards and other relevant topics and requirements.
Education
To ensure comprehensive and sustainable understanding of the Code of Conduct and industry best practices, applicant members may be required to undergo specialized training and education programs. These programs may cover relevant topics such as regulatory compliance, security protocols, responsible trading practices, and blockchain technology.
Applicant members are expected to provide relevant documentation to support their certification. This may include legal registrations, financial statements, references, and any other information deemed necessary for the evaluation process. Additionally, a due diligence review may be conducted to verify the accuracy and legitimacy of the information provided.
Documentation and Due Diligence
Based on the results of the certification, competent body of the CEO (such as Certification Committee) will issue relevant certification decision regarding the applicant member. Certified members will receive a formal certification and badge of compliance with the Code of Conduct, demonstrating their commitment to ethical and responsible practices within the Cryptoasset Market.
Certification Decision
It is foreseen that the certified members will be subject to ongoing compliance monitoring to ensure their continued adherence to the Code of Conduct and any changes in laws and regulations. Periodic audits and reviews may be conducted, and members are required to promptly address any issues identified during these assessments.
Ongoing Compliance Monitoring
10. SANCTIONS FOR NON COMPLIANCE
Warning and Remediation
In cases of minor violations or instances of inadvertent non-compliance with the Code of Conduct, CEO members may receive an official warning. The member will be notified of the violation and provided with guidance on how to remedy the situation and prevent future occurrences.
Continued or repeated non-compliance with the Code of Conduct may result in the suspension of certain privileges within the CEO's community. This may include temporary restrictions on participation in certain activities or access to specific resources and platforms.
Suspension of Privileges
For more serious violations or a pattern of non-compliance, CEO members may be placed on probation. During this period, the member's activities and adherence to the Code of Conduct will be closely monitored. Failure to demonstrate improved compliance within the probationary period may lead to further sanctions.
Probation
Termination of Membership
Severe or repeated violations of the Code of Conduct, or failure to comply with sanctions during probation, may result in the termination of membership within CEO. The termination may lead to the loss of access to community resources and participation in related events and activities.
Legal Consequences
In cases where non-compliance involves legal violations or fraudulent activities, CEO reserves the right to take appropriate legal actions against the responsible party. Legal consequences may include civil or criminal proceedings in accordance with applicable laws and regulations.
Public Disclosure
In certain circumstances, CEO may choose to publicly disclose instances of non-compliance or violations of the Code of Conduct, as part of its commitment to transparency and maintaining the integrity of the Cryptoasset Market. Such disclosures will be made in compliance with privacy and data protection laws.
Loss of Certification
Certified CEO members who consistently fail to comply with the Code of Conduct may have their certification revoked. Loss of certification may impact their reputation and standing within the Cryptoasset Market.
Reconsideration and Appeals
Members subject to sanctions have the right to seek reconsideration and appeal the decision through a formal process by submitting an appeal to the Board. The appeal should be submitted in writing, providing additional information or clarifications as deemed necessary. The decision of the Board regarding the appeal shall be final. Sanctions will be applied proportionately, considering severity, frequency of violations as well as other circumstances. The primary goal of sanctions is to maintain a safe, ethical, and compliant environment within CEO's community, safeguarding the interests of all stakeholders and promoting
responsible conduct.
Bylaws of CEO
The Bylaws of CEO, regulations of the CEO as well as other requisite founding documents shall contain provisions with detailed procedures applicable in case of violations or non-compliance with the Code of Conduct as well as related enforcement mechanisms.
11. FINAL PROVISIONS
Amendments and Modifications
This Code may be amended or modified from time to time at the discretion of CEO, by virtue of the relevant decision of the Board of the CEO.
Any changes will be communicated to the members as well as to all the relevant parties, and their acceptance and adherence to the updated Code will be presumed unless otherwise indicated in writing.
By becoming a part of CEO, all individuals, including employees, contractors, volunteers, partners, and stakeholders acknowledge that they have received, read, and understood this Code. Failure to abide by its principles and policies may result in appropriate disciplinary action.
Acknowledgment of Receipt
CEO is committed to fostering an inclusive and diverse environment where everyone is treated with respect and fairness. This Code prohibits any form of discrimination, harassment, or bias towards any individual or group based on race, ethnicity, religion, gender, sexual orientation, age, disability, or any other characteristic protected by law.
Non-Discrimination and Inclusivity
Confidentiality and Privacy
All parties bound by this Code shall respect the confidentiality and privacy of sensitive information, including but not limited to proprietary business data, personal information, and internal communications. Any disclosure of such information must be done in accordance with the applicable laws and regulations.
Governing Law
This Code shall be governed by and construed in accordance with the laws of the Republic of Lithuania without regard to conflicts of laws principles. Any disputes arising from or in connection with this Code shall be subject to the exclusive jurisdiction of the competent courts in Lithuania.
Severability
If any provision or part of this Code is held to be invalid or unenforceable by a court of competent jurisdiction, the remainder of the Code shall not be affected thereby and shall be enforced to the fullest extent permitted by law.
Waiver
The failure of CEO to enforce any provision of this Code at any time shall not be construed as a waiver of such provision or the right to enforce the same at a later date.
Contact Information
For any questions or concerns regarding this Code or its implementation, individuals can contact the Managing Director Skaiste Budbergyte-Zabielaite at skaiste@cryptoeconomy.world.
Effective Date
This Code shall become effective on 2023 December 1st, superseding any previous versions.
By adhering to this Code, CEO members collectively uphold their commitment to maintaining a positive, ethical, and respectful environment within CEO and in all of their interactions with external stakeholders.
It is anticipated that this Code shall be employed by the competent bodies and regulators as a good example and leading standard of Cryptoasset Market industry self-regulation.
